Nonprofit group critical of Revenue's inability to collect unpaid taxes

Apr. 9, 2012

Written by

Gannett Wisconsin Media Investigative Team

If Wisconsin really wants to get serious about collecting the $1 billion in unpaid taxes owed to the state, the solution is simple: Invest more in collections.

In February, the nonprofit Institute for Wisconsin's Future published an update to an earlier report titled "Investing in Revenue. How Wisconsin can profit by using the Minnesota model for closing the tax gap."

The group, which promotes policies that benefit middle- and low-income families and public employees, is critical of what its research director calls "a decade of disinvestment" that has left the state Department of Revenue short-staffed and unable to perform its duty to collect unpaid taxes effectively.

"There are simply not enough people," said Jack Norman, the institute's research director. "We've seen examples in Minnesota that you can actually have decent results with more people."

The state has tried that method in the past. Wisconsin's 2009 state budget included $11.8 million on top of the approximately $40 million the Department of Revenue spent annually on audit and compliance — cash that the Legislature added and that was not in Gov. Jim Doyle's proposed budget, Norman said.

Then, the 2011-13 budget from Gov. Scott Walker trimmed $5.3 million in 2012 spending and lowered the goals for the group, the report says.

"Except for a small upward blip in 2009, the DOR has steadily lost employees," the report says. "Under the current state budget, the department lost another 52 staffers."

Meanwhile, Minnesota's Legislature pumped an additional $10 million to $28 million into its collection efforts in every budget since 2003. That led to more than $1.6 billion in additional revenue for the state.

For every dollar spent on boosting tax collection efforts in Wisconsin, at least eight dollars in new revenue are returned, Institute for Wisconsin's Future research shows.

By that math, the organization figures that if the Legislature would approve $12.5 million in additional funds in the remainder of the 2011-13 budget, it could generate more than $100 million.

The report says the additional money would boost staffing focused on auditing dollars that slip through the cracks and augmenting the compliance department that collects debt.

Unfortunately, other anti-fraud efforts all seem to be aimed at low-income residents, the "lowest hanging fruit with the least dollars to begin with," Norman said.

"It's frustrating," Norman said. "I don't at this point see a lot of movement to getting more funding for tax collections in Wisconsin."

Two people were killed and nearly 50 bicyclists and pedestrians were injured last year in crashes in Appleton. As more bicyclists and walkers hit the road in the warm weather, Appleton police plan to combat risks by stationing officers at problem spots.